Objective: To study the impact of a model adopted to improve availability and accessibility to essential drugs and impact on hospital budget in a super specialty tertiary care hospital. Methods: The interventions consisted of selection of limited list of essential medicines (EML) and procurement through centralized pooled procurement system in 1996-1997, followed by setting up of Drugs & Therapeutic Committee (DTC) to review drug expenditure and prescribing pattern in 1998. Analysis of the annual hospital budget, expenditure on drugs, availability of key drugs, stock-outs, and ABC analysis was done before (1994-1996) and after intervention (1997-2004). Results: Rise in average drug expenditure from 3.63% to 5.16% only was observed after intervention despite 5-fold rise in patient attendance. Previous trend of ever rising annual drug expenditure was reversed immediately after interventions in 1997 as drug expenditure reduced by 47%, accompanied by increased availability (94.6%) of key drugs. Despite high expenditure on key drugs (75.89%) mean availability was 67.48% but after intervention with the same expenditure (77.68%) it increased to 95.28%. Percent drugs out-of-stock decreased from 27.57% to 19.57% & were of minor duration with no stock-out of vital drugs. ABC analysis before intervention showed only 3.33 drugs of the category A consumed 74% budget which increased to 9.63 drugs consuming 79.53% of the annual drug budget. Analysis of top 10 drugs consumed showed reversal of previous trend of non-essential among top 10 drugs from 1998 onwards where only vital drugs represented top 10 drugs. Conclusion: Effective containment of overall expenditure on drugs accompanied by increased availability of essential drugs is possible by some managerial interventions- selection of essential drugs, centralized pooled procurement and functioning DTC. These interventions serve to optimize the value of limited government funds and thereby empower and support government in making basic medicines available to all.